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iPhone on Verizon is a Bad Idea!

The iPhone has always been a status item. As Marty Neumeier would say, the iPhone owners are part of a loyal Brand Tribe. They talk about the iPhone to friends, they wait in line for the newest release. They are loyal. Many users switched cell phone companies just to get the iPhone. (Really … who even considered AT&T before the iPhone??) It’s a big clique.

CNN reported that internationally, Apple is ending exclusive deals in favor of multi-carrier arrangements. In France for example, Apple ended the exclusive deal with Orange and is now offering the iPhone through other carriers. The end result increased the iPhone to a 40 marketshare in France.

What will happen when the iPhone is offer by Verizon and even Sprint? Sure, Apple will sell a ton of phones. That’s the short-term goal, but what about the future? It would also dilute the “status value” of being an iPhone owner. Would the previously loyal brand tribe stick with the iPhone when everyone seems to have it? Or, will they start looking for something new to remain a trend setter. After all, the iPhone has been on the market for several years now. The new GS is very similar to the original iPhone in terms of look and feel. It is a little “long in the tooth”.

Apple has always been a smart marketer. It would make sense if Apple is preparing something new for release. How many times has Apple reinvented the iPod? Each generation is different from the previous one. The same for the iMac. Yet, the iPhone has not changed.

Could the rumored iTablet be Apple’s next Big Thing combining iPhone, iMac, iPod, iKindle, iSink and iToaster into an iNetbook? It makes you wonder … What is Steve Jobs really working on?

4 thoughts on “iPhone on Verizon is a Bad Idea!”

To preface my comment: my family has been in the wireless industry for many, many years, and recently my father and I have been discussing the iPhone and AT&T’s exclusivity rights. Since he does is not part of the “big four” wireless carriers, he is quite often excluded from carrying popular devices like the iPhone, Blackberry Storm, and Palm Pre.

In the discussions between my father and myself, it seems like Apple is A) looking to increase it’s market share with the iPhone, and is B) partially being forced into reconsidering it’s exclusivity with AT&T. Part of the reason this whole topic is buzzing right now is because Congress, the Department of Justice, and the FCC are all looking into the “fairness” of exclusivity rights, and those smaller carriers outside of the “big four” are on their side. The little guys want to carry the iPhone, the Blackberry Storm, and the Palm Pre as well, so they can offer their customers the same in-demand phones that the bigger carriers can. It’s really all about the smaller carriers being able to compete with the big boys.

I’m not disagreeing with your article at all, I just wanted to offer a “sort-of-insider” perspective to the topic.

Actually, from a business stand-point, I agree with your comments. Apple would love to sell as many iPhones as they can and there is a limit on how many they will sell through AT&T. But, from a marketing point of view, that exclusivity has a mystique. I have yet to meet an iPhone user that isn’t excited to show it off. Put two iPhone users together and they gleefully jabber iSpeak. Remember Palm Pilot users about 5-years ago? It builds a longing to be part of the in-group (the Tribe of the iPhone). If there is suddenly more people in the in-group than in the out-group, don’t the roles swap? Suddenly, the trendsetters are now part of the pack, and that goes against their “role”. Time to set a new trend.

Would the iPhone have created such a buzz if all of the providers had it at launch? The reaction would probably have been very negative. If you remember, the first iPhone had a few major problems (ex. activation failures, networking issue, battery life issues, etc.). Apple was able to quickly fix these problems before the buzz wore off. A limited roll-out helped keep things under control. The Palm Pre is going through the same phase right now.

Compare the iPhone to a Blackberry. Is there any real excitement over any of the Blackberry models? All of the providers have at least one or two variations on the same phone. Is anyone waiting in line for the newest Blackberry? The only unique model is the Storm and the soon to be released Storm 2, both are Verizon exclusives. The Storm had buzz with the Blackberry Tribe, but is a Blackberry without a keyboard really in-sync with the typical Blackberry user? It’s more of a lure for new users who want to upgrade their Verizon phone with a iPhone-like device … and get their feet wet with a Blackberry. It is not a reason to switch cellphone providers like the iPhone or even the Palm Pre. It’s easier to just settle on whichever Blackberry is currently offered by your current cellphone provider. So, if every cellphone provider had the iPhone, wouldn’t it become another “Blackberry”?

I’m confused by your statement “who even considered AT&T before the iPhone??” The answer is either no one, as the current AT&T Mobility didn’t exist until after the iPhone was announced; or everyone, as Cingular, which became AT&T Mobility, was the largest U.S. cellular carrier by subscriber count after they acquired the original AT&T Wireless in 2004. Apple originally began their negotiations with Cingular, who didn’t become AT&T Mobility until early 2007, after the announcement of the iPhone. The name had been changed by the time iPhone was released.

I wonder how different things might have been had SBC/AT&T not merged with Bellsouth, and taken over full control of Cingular.

AT&T is a historic brand with a great pedigree dating back to the merger of two Baby Bells. But, AT&T Wireless was always overshadowed by larger players like Cingular and Bell Atlantic (Verizon) who had better perceived reputations.

As you stated, Apple was negotiating with Cingular not AT&T Wireless. That fact that the iPhone ended up on AT&T was a direct result of Cingular’s decision to buy-out/merger with AT&T/Bell South and rebrand the new company AT&T. Had this merger not gone through, the iPhone would have been a Cingular exclusive never an AT&T Wireless exclusive.